Feb 14 Bird Scooters Raises $15M Amid Legal Spat With Santa Monica

Stroll around Santa Monica these days and, along with its postcard-perfect Pacific Ocean views and lively pier, you’ll see hundreds of people on matte black electric scooters whizzing around this stylish Los Angeles suburb. They’ve been a hit since arriving unannounced last September from startup Bird, which just raised $15 million to take its “last-mile” service nationwide.

The swift popularity of Bird, created by former Lyft and Uber executive Travis VanderZanden, also sparked a legal fight with Santa Monica, which filed a criminal complaint against it in December for operating without the right kind of business license. Undeterred, VanderZanden says talks with the city are “productive” and that his undocked, rechargeable scooter service is moving into more of Los Angeles as well as San Diego.

“After I left the ridesharing space I really spent a lot of time thinking about the future of transportation and thinking about traffic problems … I started thinking that electric vehicles, short-range electric vehicles, that was the best way to try to get Americans out of cars,” he told Forbes. The Series A funding, led by Craft Ventures, “validates the model and what we're doing. We're excited to start scaling across the U.S.”

Legal issues notwithstanding, Bird’s speedy success is a positive development for the Los Angeles region, the perennial leader in U.S. traffic congestion. It comes as major cities worldwide look for new tools, including bikeshare programs, carpooling apps, microtransit van services and powerful data platforms to curb traffic and climate-warming carbon emissions.

Bird and its backers are convinced that its scooters do exactly that. “It’s convenient, it’s green, it alleviates traffic and makes cities more livable,” David Sacks, co-founder of Craft Ventures and a member of Bird’s board, said in a statement. “This product has the potential to transform urban areas.”

The scooters go about 15 miles per charge and are designed to be used for relatively short trips. Riding one requires only the downloading of the Bird app, which directs you to an available scooter. Once located, the app is used to scan a Q-code on a Bird, and after driver’s license and credit card information are put in, it’s time to ride. There’s a base charge of $1 plus 15-cents per mile.

To date more than 250,000 rides have been taken on Bird’s 1,000 scooters, though VanderZanden didn’t provide financial details about the business. He also declined to say who manufacturers them and where they’re made, though they bare a strong resemblance to Segway’s $399 ES1 electric scooter.

When done riding, users are encouraged to park the Birds in accessible locations, but without blocking sidewalk access. Riders are also supposed to wear helmets and use the vehicles in bike lanes, rather than sidewalks, but it’s apparent that a large portion of Bird users in Santa Monica and next door Venice, California, disregard both guidelines.

Bird uses a network of contractors to pick up and recharge the vehicles overnight, before putting them out again early the next day. "That's something the cities love," VanderZanden said.

That’s resulted in at least 281 traffic stops and 97 citations involving Bird scooters in the first five weeks of the year, The Washington Post reported. Local emergency services have also responded to eight Bird rider accidents, including a head trauma incident and an arm fracture, according to the report.

In its Dec. 7, 2017, suit, Santa Monica said "Bird employees, without required City authorization, flooded City public sidewalks with motorized scooters for rent on a daily basis. These scooters obstructed pedestrian access to public sidewalks, and blocked driveways and ADA Ramps. City staff repeatedly warned Bird against continuing their illegal business activities. The City also issued multiple citations directing Bird to obtain proper business licenses, to remove the scooters from the public sidewalks, and to cease storing scooters within the public right of way. However, Bird continued to disregard the City’s warnings and even citations."

Bird says Santa Monica’s suit arises from a "misunderstanding" about its business, and that it secured a license."

"The issue is that the city also said that Bird needed a mobile vending license – like a taco truck would have. We didn’t think that this was necessary as we are not selling tacos or hot dogs,” the company said in a statement. “This type of misunderstanding happens as old regulatory schemes need to adapt to new technologies. We’re working closely with Santa Monica to resolve this misunderstanding."

VanderZanden, who left Uber in 2016, sees potential to resolve the spat.

“We're having some great conversations with the city recently. The city wants Bird to operate in the city,” he said. “Santa Monica is a very eco-friendly city so I think sustainable transportation alternatives like Bird, the city ultimately loves. We've had some really productive conversations over the last month.”

One of Bird’s Series A backers, Tusk Ventures, may help smooth things over with Santa Monica and other Bird markets, as well as providing funds. Led by Bradley Tusk, the firm touts itself as “the world’s first venture capital fund to work with and invest solely in high growth startups facing political and regulatory challenges.”

Given his experience as Lyft’s COO and vice president of driver development at Uber, political and regulatory challenges are something VanderZanden has faced before.